Exploring the Dynamics of Solar Open Access in the Power Sector

Solar power is indisputably one of the most abundant sources of renewable energy available. Now with the increased realization of the need to resort to replenishable sources of power, solar energy systems are on the rise. Many domestic and industrial consumers are setting up solar power systems on their premises. The solar sector also has support from the government through various policies and subsidies.  

Apart from the distribution companies, there is an option for larger power consumers (consumption of more than 1MW) to buy power from other suppliers. This is called the open access market. In this blog, we have delved deep into what solar open access is, and the dynamics associated with the same.

What is solar open access?

Open access, as the name suggests, is an open market where consumers can buy power directly from power producers. There is a long-term agreement between the industrial and commercial consumers of open-access electricity and the power developer.

Normally, consumers are dependent upon Distribution Companies (DISCOM) for power, where they pay a fixed rate fixed by the local DISCOM. This way, consumers are able to get power at optimum rates that are less than that paid to DISCOM. 

Nearly 1.9 GW of renewable energy has been added through open-access installations in 2022. This is due to more and more consumers looking to reduce carbon emissions and fall in the cost of renewable energy through open access.

Types of solar open-access

There are two types of open access, namely:

Interstate open access

In interstate open access, a consumer is allowed to purchase open-access power from a distributor outside the state as well. Here, the regulations levied by the Central Electricity Regulatory Commission need to be complied with. It allows for short-, medium-, and long-term open access. 

Intra-state open access

When the power distribution company and the purchaser belong to the same state, it is intra-state open access. Here, the regulations of the State Electricity Regulatory Commission have to be followed. Short- and long-term open access is allowed in the case of intra-state open access.

The dynamics of solar open access

In spite of the popularity and increase in consumers moving toward open access, there seem to be some hiccups. We shall discuss the roadblocks and the road forward for solar open access here:

The Roadblocks

• With the flexibility offered by an open-access system, some consumers purchase power from more than one distributor. This can be from different private players, or both private and state distribution companies.
• Consumers keep switching between open access and regulated supply whenever there is a fall in price. Even with the levies, open access sometimes seems cheaper than DISCOM’s. 
• Due to this factor, disruptions in generational capacity occur, grid failures occur, and more.
• While the state allows open access, due to more consumers shifting to it, the DISCOMs start to lose their revenues. 
• With mounting losses, DISCOMs deny open access, which becomes a huge obstacle for consumers wanting to shift.
• Some states started to levy additional surcharges to consumers opting for open access. This increases the initial investment cost and poses a deterrent to consumers who are considering a shift.
• Where there is a sudden change in charges levied, it prevents consumers from considering long-term contracts. 
• Certain states also show resistance and subject applications to unreasonable delay in processing.
• When interstate open access is chosen, inconsistencies in the rules in each of the states are also a hurdle.
• For some consumers who are located in special economic zones or who operate from shared premises, there is no provision to make open access available.

Road Forward

To make open-access solar power available without any hurdles, a way forward should be explored. Some of the points to note are:

• Frequent shifts from open access and regulated supply should be curtailed. Power tariffs may be an alluring factor for some consumers, but the switching can cause serious concerns. Once they move to one type of supply, movement to the other form should be restricted for a certain time frame, and this should be brought out as a rule.
• The unexpected changes in tariffs and subsidies should also be regulated. This will encourage consumers to look for long-term contracts and restrict them from shifting based on subsidies. 
• The procedural formalities that pose a hurdle should be regulated. When DISCOMs fear mounting losses, they impose restrictions on solar open access. This situation should be avoided by bringing in a win-win for both types of suppliers.
• The Direct Benefit Transfer (DBT) program can help DISCOMs stabilize so that they do not increase charges. This program by the government disburses subsidies directly to the bank accounts of the recipients.
• A consistent open-access solar policy by the government would be more encouraging to promote open access for the long term. The approval process needs a revisit and there should be an official agency set up to look into the concerns and complaints without any delay. At present, the arbitration process takes as long as six months.
• A central policy to do away with the inconsistencies in interstate rules and regulations for solar open access will help more consumers choose developers outside the state. A progressive policy that benefits both states should be developed.

Conclusion

Solar power is one of the cleanest forms of energy and is an excellent replacement for conventional sources of power. Various government policies are in favour of promoting solar power in India. With this, open access is an exceptional way to bring in more consumers for solar power. 

Understanding the roadblocks and bringing in the necessary changes will need a combined effort of policymakers, distribution companies, and consumers. This will go a long way in improving the country’s energy independence.